I've had this happen to me at least 5 times and every time I'm mad at myself for not being more assertive in telling a client that their "friend" or "relative" in the lending business is screwing them in the program or fees they are trying to put them in. It's difficult to tell a buyer that they're family member isn't looking out after their best interest. I also know how difficult it is to work with family, but a choosing the right home loan for someone is an extremely important task. Has any one come across this problem and how do you handle this very precarious situation?
I've come across it many, many times. There is only one way to tell them. Straight out with documentation. Take their GFE and give them one from a good mortgage loan officer. If they don't see the difference and go back to the relative or friend and tell them to stop taking advantage of them, they deserve what they get.
Either the mortgage company will give them a better deal or they will change mortgage companies. Or, if not, then they don't get to complain about their loan.
From a lender's perspective, I'm going to agree with Jacob. I've done loans for friends and family for free - they definitely couldn't have gotten a better deal elsewhere.
From a realtor's point of view, I would just try to ask a few questions about the quote that they're getting, and then run it by a trusted mortgage associate. If it looks like they're not getting a good deal, offer to have an "independent 3rd party" review their paperwork for free, if they'll allow it. Let them make their own decision from that point.
It's a very delicate situation, especially from the realtor's side - there's a fine line between helping them purchase their home and being a financial advisor. (No offense)!
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